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By John Lee.

Qatar's Ambassador to Iraq, Khalid bin Hamad Al-Saliti, met with the former President of the Kurdistan Region of Iraq, Massoud Barzani, in Salahaddin on Wednesday.

The discussion revolved around the significance of the relations between Qatar, Iraq, and the Kurdistan Region.

During the meeting, the Qatari Ambassador expressed his country's intention to open a consulate in Erbil.

President Barzani welcomed this development, emphasizing the positive advancement of bilateral relations.

In addition to diplomatic matters, the meeting also touched upon the political situation in the region.

(Source: Barzani Headquarters)

By John Lee.

The Iraqi Ministry of Oil has signed four contracts, reportedly worth a total of $27 billion, with the French company TotalEnergies.

The contracts cover a range of projects, including the development of the Ratawi [sometimes called Artawi] oil field, the construction of a 1GW solar power plant, and the transportation of seawater for productive oil fields.

Also included is the Gas Growth Integrated Project (GGIP), in which TotalEnergies will hold a 45-percent stake, with 30 percent held by the state-run Basra Oil Company (BOC) and 25 percent by QatarEnergy, which will process 600 million cubic feet of gas per day.

The signing ceremony was held under the auspices of Deputy Prime Minister and Minister of Oil Hayan Abdul-Ghani. He said that the contracts "achieve the strategic vision of the oil sector and in harmony with the future plans in that."

The head of the French company Total, Patrick Pouyanné, expressed his happiness over the signing of the contracts. He said that his company is "keen to implement the terms of the contracts concluded within the specified controls and the time limit for that."

The official spokesman for the Ministry of Oil, Asim Jihad, pointed out the importance of these integrated contracts in developing the oil industry in Iraq. He stressed that the ministry is keen to implement contracts for strategic projects that achieve long-term gains for the country.

(Source: Ministry of Oil)

By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Construction Activity and Stability

The market, as measured by the Rabee Securities RSISX USD Index was up 4.4% in June, and up 30.4% for the year.

The market's technical picture continues to be positive, with the macroeconomic fundamentals discussed here last year supporting the argument that the market's uptrend will likely remain in force.

However, its upward slope might moderate or go sideways as it consolidates its gains for the year before its next move. Supporting the consolidation thesis is the technical picture of the Rabee Securities RSISX IQD Index (the Iraqi dinar (IQD) version of the Rabee Securities RSISX USD Index) which reflects a multi-month consolidation pattern (second chart below).

The fundamental drivers for the market's next move would come from the government's implementation of the 2023 budget following its passage into law at the end of the month. The expansionary budget, as it comes into force, would result in meaningful liquidity injections into the economy as a consequence of the oversized role of the government's spending in the economy - essentially an efficient direct transmission mechanism of oil revenues into the real economy. Ultimately, these liquidity injections will feed into corporate profits, which in turn, will provide the impetus for the market's next move.

RSISX USD, and RSISX IQD Indices versus Average Daily Turnover

(Source: Iraq Stock Exchange, Rabee Securities, AFC Research, data as of June 30^th)

Construction Activity and Stability

As discussed here a few months ago in "Supermarkets and Stability", one of the most promising recent developments in the economy is the meaningful capital investment by businesses and individuals, brought about by the relative stability of the last five years following the end of the ISIS conflict. While, these years were punctured by several shocks, such as the countrywide demonstrations in late 2019, the assassination of Iran's top general in Baghdad followed by the emergence of COVID-19 and the crash in oil prices in 2020, the undecisive elections in 2021, followed by a year of a political impasse topped by political conflict and violence in the summer of 2022.

Nevertheless, these shocks pale in comparison to those of the prior decades of conflict that Iraq had experienced, and crucially, were short-lived and did not lead to self-reinforcing cycles of violence and conflict along the lines of the past. As such, this relative stability provided a more stable and predictable macroeconomic framework for businesses and individuals to operate in and to plan for capital investments on a scale not seen since before the last prior decades of conflict; that in turn, should be sustained by the population's pent-up demand for goods and services to catch up with the rest of the world.

These developments were first seen in the immediate aftermath of the ISIS conflict through the revival of long-forgotten social activities, expressed in consumer retail consumption (restaurants, coffee shops, and malls) and construction activity as reported in AFC Iraq's travel report in the summer of 2019 "Significant Social and Economic Transformation".

Over the five years since the end of the ISIS conflict, the construction activity that was then in the early stages of revival in Baghdad turned into a building boom, with construction cranes popping up everywhere and transforming the city. The last time Baghdad witnessed such a massive transformation was in the early days of the Iraq-Iran war, as the regime then embarked on a "Guns and Butter" policy to insulate the city's population from the ravages of the war, but eventually abandoned the policy as costs mounted and the war dragged on.

During these decades, the city's population grew from 3.1 million to 7.7 million while its infrastructure, until the last few years, for the most part, stayed the same. A continuation of the relative stability of the last five years and the multi-decade pent-up demand for infrastructure in Baghdad should sustain this infrastructure build, which can reshape the city in much the same way the building boom of 2003-09 reshaped Dubai and brought with it much prosperity.

This private sector led construction activity was supported by funding from the Central Bank of Iraq (CBI)'s IQD 14 tn (USD 10.7 bn) and IQD 4 tn (USD 3.1 bn) subsidised lending initiatives. Initially launched in 2015, the IQD 5 tn lending initiative was channelled through specialised state-owned banks and the housing fund, to support the real estate, industrial, and agricultural sectors, and the IQD 1 tn lending initiative was channelled through private sector-owned banks to support small and medium enterprises.

Both initiatives were augmented in mid-2020 with extra funding by the CBI, and lending terms were eased with interest rates as low as zero for the housing sector. Both of these measures accelerated the initial modest uptake with the bulk of the lending driven by demand for financing by the real estate sector, so that during 2021-22, about IQD 6.7 tn and IQD 0.5 tn were disbursed from the two initiatives for real estate financing (*).

This pent-up demand for real estate and the relative stability enjoyed by the country are acting as magnets, attracting regional capital to invest in the sector, such as Saudi Arabia's USD 1 bn investment in a new commercial, housing and shopping district in Baghdad. Announced in early June 2023, the project named "Baghdad Avenue" is a part of the country's accelerated reconciliation with its once close-knit neighbours in the countries of the Gulf Corporation Council (GCC), which was ruptured by the invasion of Kuwait in 1990 (**).

The real estate sector is not the only sector to benefit from the interest of regional capital as seen by the formation of the Saudi-Iraqi Investment Company, launched in late May 2023, with capital of USD 3 bn to invest in Iraq, funded by the Saudi Arabian wealth fund PIF. This was soon followed by plans for two significant regional investments in the country. The first was in  mid-June 2023 that Qatar plans to invest USD 5 bn over the next few years; while the second was in early July 2023 that  Saudi Arabia and the United Arab Emirates, each planning to allocate USD 3 bn to fund the creation of joint business councils to expand  investments in, and trade with, Iraq.

Supplementing the private sector-led construction activity in Baghdad is the beautification campaign of the city undertaken by the current government as part of its drive to gain public support and legitimacy - following its troubled formation in October 2022, a year after the undecisive October 2021 parliamentary elections that was marked by political conflict and strife. This beautification campaign involves "... improving roads, bridges and sidewalks, removing security checkpoints that worsened traffic, cleaning up facades of buildings damaged by war and revamping parks and promenades that hug the Tigris River that bisects the city" as reported by Reuters, in mid-May 2023 with photos showing the city reclaiming its former beauty.

The transformation of Baghdad has brought with it the inevitable loss of green spaces and traditional architecture that has marked its uniqueness throughout the centuries. Its famed date orchards and gardens that filled the city, as well as its beautiful traditional architecture such as the old homes with wood-latticed windows and traditional brick villas, are being replaced by malls, shopping districts, and apartment blocks - in an all too familiar pattern of destroying the old to build the new throughout the city's history (***). These unfortunate aspects of the city's development were reported recently by the New York Times and the Washington Post with vivid photographs of the traditional and new that show a city that is being transformed after decades of conflict.

Below are photographs taken by the author over the last few months of some of the parts of Baghdad that have been transformed and those that are being transformed, and complement the phots within the articles by Reuters, the New York Times, and the Washington Post mentioned earlier.

42^nd Steet, Baghdad

 

King Abdul Malik bin Marwan Street, Baghdad

 

Al Masbah Junction, Baghdad

 

Al Nedal Street, Baghdad

 

Al Sadoon Street, Baghdad

 

Palm Trees Street, Baghdad

 

Baghdad Tower Street, Baghdad

 

Yermuk Pool Street, Baghdad

 

Yermuk Pool Street, Baghdad

 

Entertainment Club Street, Baghdad

 

Baghdad Tower Street, Baghdad

 

Baghdad Tower Street, Baghdad

Notes and sources:

(*) Source: Central Bank of Iraq, IMF Iraq country report number 2023/075, and "Priority financing needs of Iraqi SMEs Report" published by GIZ May 2023.

(**) The reconciliation was reported here at the end of the market report for January, when the city of Basra hosted the 25^th edition of the bi-annual Arabian Gulf Cup football tournament, known as Khaleeji 25, for the first time since 1979. Then, over 50,000 GCC visitors streamed into Basra over the two weeks of the tournament in January 2023 which was the first such visit since the 70's.

(***) This pattern was discussed here in "Sandstorms, and a stroll down Al-Mutanabbi Street" in its description of the historic buildings in Al-Mutanabbi Street writing " ... A few years, later the building was expanded, and a tower was added using bricks reclaimed from the demolition of the eastern section of Baghdad's historic city wall."

Please click here to download Ahmed Tabaqchali's full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the Chief Strategist of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years' experience in US and MENA markets. He is a Visiting Fellow at the LSE Middle East Centre, Senior Fellow at the Institute of Regional and International Studies (IRIS), and a Senior Non-resident Fellow at the Atlantic Council. He is also a board member of Capital Investments, the investment banking arm of Capital Bank in Jordan.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

From Amwaj Media. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Emir's second visit in two years highlights rising Qatari role in Iraq

Qatar's Emir Sheikh Tamim bin Hamad Al Thani has met with top officials in Baghdad in his second visit to Iraq in the past two years.

The Emir held discussions with Iraqi Prime Minister Muhammad Shia' Al-Sudani, culminating in a Qatari pledge to invest billions of dollars in Iraq "in the coming years."

The fledgling economic partnership follows recent Emirati and Saudi investments in Iraq to boost the country's economy following a period of political crisis.

The full article can be viewed here (registration required).

By John Lee.

Further details have been announced regarding Qatar's major investment in Iraq.

Estithmar Holding Q.P.S.C. has said in a statement that it has signed three MoUs with Iraq's National Investment Commission (NIC) with a total value of 7 billion US dollars to develop new modern comprehensive cities, 5 stars hotels and also manage and operate several hospitals in Iraq.

MoU's were signed by Dr. Haider Muhammad Makiya, Chairman of the NIC, and Mr. Ramez Al-Khayyat, Vice Chairman of Estithmar Holding.

The first MoU outlines the development of two modern cities encompassing various sectors such as commercial, residential, and entertainment. These cities will be constructed in adherence to the highest international standards, aiming to foster sustainable economic development and promote investment opportunities in Iraq. The objective is to support the country's sustainable economic growth and attract investments.

Mr. Al-Khayyat said the housing shortage in Iraq is estimated at two million units, adding that these new cities will include residential complexes, villas, schools, commercial complexes, entertainment centers, as well as other essential facilities and services. The necessary infrastructure will also be established to support the construction of these cities.

The second MoU focuses on the development of luxury hotels and resorts to bolster the Iraqi economy and promote domestic and international tourism. It also aims to provide innovative solutions to overcome challenges faced by the hospitality sector while addressing a portion of the shortfall of 10,000 hotel rooms in the Iraqi tourism market.

The third MoU involves Elegancia Healthcare W.L.L., a subsidiary of Estithmar Holding, which will undertake the management and operation of multiple hospitals in Iraq. This initiative underscores Estithmar Holding's commitment to its global expansion strategy and the provision of world-class medical services to communities worldwide.

It is anticipated that Estithmar will commence the implementation of these projects by the end of this year.

Furthermore, Mr. Al-Khayyat emphasized the significance of the robust and strategic relations between Qatar and Iraq, highlighting their potential to contribute to the social and economic development of Iraq. He also acknowledged the favorable investment environment in Iraq, which presents various opportunities across multiple sectors.

(Source: Estithmar Holding)

By John Lee.

Iraq and Qatar have solidified their bilateral relations through the signing of several agreements and memorandums of cooperation.

Prime Minister Mohamed Shia Al-Sudani and the Emir of Qatar oversaw the signing ceremony, emphasizing comprehensive cooperation in politics, economy, energy, and investment.

A joint declaration of intent was signed, paving the way for collaboration between the two governments in various sectors.

Agreements were reached in the fields of air and maritime transport, aiming to enhance connectivity between the two nations. Additionally, a memorandum of understanding was established to waive visa requirements for holders of diplomatic passports.

Furthermore, a series of energy-related memorandums of cooperation were signed during the visit. These encompassed crude oil and liquefied gas supply to Iraq, as well as the establishment of a joint oil company and a new refinery.

In terms of investment, four memorandums of cooperation were inked with prominent Qatari entities. Iraq's National Investment Commission (NIC) entered into agreements with Qatar's Urbacon Holding Company (UCC Holding) [a subsidiary of Power International Holding (PIH)] and Elegancia Healthcare, a subsidiary to Estithmar Holding. Another two memorandums were signed with the Qatari Investment Holding Company, focusing on the development of new cities and the construction and enhancement of hotels.

According to Oil & Gas Middle East, the Urbacon agreement is a 25-year public-private partnership to build two power plants. It will involve an investment of $2.5 billion and have a combined capacity of 2.4 GW.

(Sources: Media Office of the Prime Minister, Oil & Gas Middle East)

By John Lee.

Iraqi Prime Minister Mohammed S. Al-Sudani has held talks in recent days with representatives of business interests from several countries:

On Monday, the Prime Minister received the President of the US-Iraqi Business Council, and the Vice President of the American Chamber of Commerce for Middle East Affairs, Mr. Steve Lutes. The meeting covered various topics including economic, financial, and health cooperation, as well as energy and environmental partnerships between Iraq and the United States. Additionally, the focus was on strengthening the Strategic Framework Agreement between the two countries, prioritizing the advancement of these areas as outlined in the government program. The Prime Minister emphasized the government's commitment to creating a secure investment environment for international companies through the implementation of laws and regulations. He highlighted the numerous investment opportunities available in Iraq, and expressed optimism about the potential arrival of major companies.

Also on Monday, he received a delegation of German company representatives, accompanied by the German Ambassador to Iraq, Mr. Martin Jaeger. During the meeting, they discussed the practical implementation of agreements made during the Prime Minister's visit to Berlin in January, focusing on cooperation and partnership opportunities across multiple sectors. The Prime Minister highlighted the growing development of the relationship between Iraq and Germany, emphasizing that Iraq is open to all kinds of economic partnerships with its friends and partners. He noted that Iraq's current state of security and economic stability serves as an encouraging factor, supported by both official and popular desire from all parties for the success of Iraq's economy.

He also received a delegation of prominent businessmen and investors from the United Arab Emirates (UAE). The delegation was headed by Mr. Abdullah Mohamed Al Mazrouei, Chairman of the Federation of UAE Chambers of Commerce and Industry. He expressed a shared desire to explore new opportunities for joint economic cooperation and strengthen existing partnerships. The Prime Minister highlighted the ambitious investment opportunities in Iraq and expressed the country's readiness to make a significant economic leap toward sustainable development and the achievement of its goals. He pointed to the successful investments made in Iraq's energy and petrochemical sectors as examples of the country's potential for growth and development. The Prime Minister emphasized that the government has a clear and actionable plan and is committed to tackling bureaucracy and providing the necessary resources to establish a conducive investment environment.

On Tuesday, the Prime Minister received a delegation of businessmen and investors from the Qatar, headed by Sheikh Nawaf Bin Nasser Al-Thani. During the meeting, Prime Minister Mr. Mohammed S. Al-Sudani emphasized Iraq's commitment to economic openness, both regionally and internationally. He highlighted the government's dedication to establishing productive partnerships in the investment sector, with a particular focus on capitalizing on the available economic opportunities. These opportunities include renewable energy initiatives, as well as the strategic utilization of associated gas and petrochemicals.

(Source: Media Office of the Prime Minister)

Statement from US National Security Advisor Jake Sullivan Welcoming Developments in Iraq's Energy Sector

We welcome significant progress in Iraq this week with respect to energy deals that further strengthen Iraq's sovereignty, independence, and economic prosperity.

First, the Government of Iraq and the Kurdistan Regional Government reached a historic agreement on the export of oil and management of revenues through the Iraq-Turkey Pipeline. This agreement paves the way for a multi-year budget now before Iraq's Council of Representatives and an eventual hydrocarbons law for long-term stability and predictability in Iraq's energy sector.

Second, the Government of Iraq reached an unprecedented $27 billion deal with France's TotalEnergies, including a project to enable the recapture and use of flared gas in southern Iraq. Once implemented, this historic project will increase electricity supply for the benefit of the Iraqi people, advance Iraq's energy self-sufficiency, reduce harmful climate effects from flared gas in southern Iraq, and allow for the export of gas products to new markets.

We are pleased that companies from Qatar, Saudi Arabia, and the United States will play important roles in this infrastructure project. The United States is proud to support these and other regional projects and ongoing diplomatic initiatives to advance a more stable, interconnected, and prosperous Middle East region, which ultimately benefits the United States and the American people.

(Source: The White House)

By John Lee.

TotalEnergies has confirmed that it will proceed with the Gas Growth Integrated Project (GGIP) in Iraq.

In a statement to the markets on Wednesday, it added that QatarEnergy to take a 25-percent stake in the project.

Also, in agreement with Iraqi authorities, TotalEnergies will invite the Saudi company ACWA Power to join its 1GW solar project in Basra.

The full text of the TotalEnergies statement follows:

While confirming all the terms of the Development & Production Contract signed in 2021, TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) and the Iraqi Government have, through exchanges in the past months, including in 4 occasions between Prime Minister Al-Sudani and Chairman & CEO Patrick Pouyanné, jointly defined the necessary conditions and mutual insurances to move forward with the Gas Growth Integrated Project (GGIP).

The Iraqi Government and TotalEnergies have agreed on a 30% stake for the Basrah Oil Company (BOC) in the GGIP. Furthermore, in agreement with the Iraqi Government, TotalEnergies has invited QatarEnergy to take a 25% stake in the GGIP.

The consortium will thus be composed of TotalEnergies (45%), Basrah Oil Company (30%) and QatarEnergy (25%).

TotalEnergies welcomes the continuity of the voice of the State of Iraq on this Development & Production Contract, which is a strong and positive signal for foreign investment in the country.

Signed in September 2021, the GGIP has for main purpose to enhance the development of Iraq's natural resources to improve the country's electricity supply.

According to these agreements, TotalEnergies and its partners will invest approximately $10 billion (100% share):

• to recover flared gas on three oil fields in order to supply gas to power generation plants,
• to build a seawater treatment plant in order to provide water injection for pressure maintenance to increase regional oil production, as an alternative to the use of fresh water from rivers and aquifers.

Furthermore, TotalEnergies will develop a 1 GW solar power plant to supply electricity to the Basrah regional grid. In agreement with Iraqi authorities, TotalEnergies will invite the Saudi company ACWA Power to join this solar project.

(Source: TotalEnergies)

By John Lee.

Dubai-based Value Added Distributor (VAD) Mindware has reportedly announced that it has extended its region of distribution with Dell Technologies to cover Jordan and Iraq.

According to Trade Arabia, Toni Azzi, General Manager at Mindware Qatar, Africa and Levant, said:

"Both locations are growing economies and with digital transformation initiatives taking place across multiple sectors in the country, there is need for technology infrastructure in both private, as well as public sectors. As regional distributor for Dell Technologies, we see our company playing a major role in developing and growing the vendor's business in these countries and moving it to the next level."

It adds that Mindware currently transacts with over 400 channel partners in Jordan and Iraq, including system integrators, corporate and SMB resellers, cloud providers, independent software vendors (ISVs), integrated service partners (ISPs) and small computer retail stores.

(Source: Trade Arabia)